During the age of the Republic Era, the Trade Federation possessed a military force. A significant component of this force, besides its fleet of starships, was the extensive army composed of battle droids. This droid army empowered the Federation to easily target planets lacking military defenses, bolster their economic influence, and exert control over local political landscapes. Furthermore, the true scale of the Droid Army was concealed from the Galactic Senate. The Invasion of Naboo witnessed the Federation utilizing their Lucrehulk-class Battleships to blockaded Naboo, marking the initial deployment of their droid army.
Following their defeat at Naboo, which included the loss of thousands of B1-series battle droid, the Trade Federation's leadership initiated research into enhanced combat models, leading to the development of the B2-series super battle droid. The Federation also began to expand its military capabilities. Before the Separatist Crisis, the Federation, along with other organizations, secretly formed an alliance with Dooku, also known as the Count of Serenno and a Sith Lord. Federation Viceroy Nute Gunray committed battle droids to Dooku's cause, specifically the Confederacy of Independent Systems. However, after Jedi Knight Obi-Wan Kenobi discovered Dooku's construction of a Droid Army with the assistance of the Federation and other commercial entities, the Galactic Republic mobilized its newly formed Grand Army of clone troopers to confront the CIS.
During the subsequent Clone Wars, Senator Lott Dod asserted the Federation's neutrality. Despite this claim, the Federation persisted in conducting business with the Separatists and secretly providing aid to Dooku. As part of the war efforts, the Federation fleet implemented a blockaded of Pantora to coerce the planet into joining the Separatist cause.